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tv   Mad Money  CNBC  April 16, 2013 11:00pm-12:00am EDT

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>> i'm jim cramer, and welcome to my world. >> you need to get in the game! firms are going to go out of business and he's nuts! they're nuts! they know nothing! >> i always like to say there is a bull market somewhere. "mad money." you can't afford to miss it! hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you a little money. my job is not just to entertain you but to educate and teach. so call me at 1-800-743-cnbc. sometimes in my old wistful days as a general assignment reporter for newspapers, you would get a story that was frankly too fabulous to check out. you didn't want to find anything wrong because you knew you had a
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great one on the line. you didn't want to contradict it, just in case the facts might get in the way of a good story. and that's how i felt about stocks that drove this market higher today. the dow climbing 158 points, s&p rocketing 1.43%. great day on the market -- well, the nasdaq soaring 1.5%. nice comeback from yesterday. yeah, it was a nice bounce. even as sadness overshadowed fear in the wake of the tragedy in boston. some of the rebound came from what i talked about when i gave you my playbook of the unknowns on last night's show. before people bought they wanted to know if there would be a second day of terror or a third day of golden free-fall, more on that later. they saw at the open that there was nothing horrendous overnight. that emboldened them to search for buys, things to buy now that the market had come down. some of it came from recognition that housing starts north of $1 million may hold the key to some growth here in the united states. nice contradiction to the global slowdown thesis that spearheaded
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yesterday's decline. some of the stability came from what seemed to be a cessation of the liquidations that come routinely after vicious moves lower, or hedge funds gone wild sell everything not nailed down to raise cash in order to beat the margin clerks as we saw in gold friday and monday. so let's just say there was a sense of relief all the way around. but there is something else. something else happening here. it's the emergence of another phenomena that i found in many selloffs. the emergence of what i call the first day leadership after a selloff theorem. it's leadership that comes along right on time and it is, alas, too good to check out. even, of course, because i had to check it out anyway. i'm talking about two bellwether stocks that really did lead this market's charge higher today. i'm talking about johnson & johnson and coca cola. when you have any kind of selloff it's almost always because of fears about a steep
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slowdown in the economy. now it's the global economy. yeah, the worries used to be united states centric. and perhaps the economy had been growing too hot. and the fed was raising rates. perhaps the monthly employment numbers showed a sudden reduction, as we saw in the late summer of 2007, which ushered in the great recession. maybe there is a shocking shutdown in retail sales. now, i'm not saying that every single selloff plays out like this, but the vast majority of them actually really do. of course, lately we have a new element. we are all one world these days and a slowdown in china is now greeted as more of a threat to our stock market than an actual slowdown here in the united states. crazy, but it's true. when you get these kind of jitters, which include the requisite collapse in commodities like oil and copper and the markets sell, sell,
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sell, decline can't be combatted overnight because it's so horrendous, it does kind of paralyze things. but here's what happens. certain sectors stabilize a lot faster than others, particularly if there is news that's positive for stocks in those sectors. typically, the first stocks that try to get their footing after a slowdown selloff are the food and drug plays. hey. come on. recession-proof. now you usually have to guess about how well they're really doing. wow, is colgate okay, venezuela, i don't know about that general mills. what can you do? companies only report four times a year, so you don't know whether you're stepping into an unknown where those stocks are doing badly. but today fortuitously was not one of those days where we didn't know. see, we got earnings before the market opened from johnson & johnson, the gigantic health care company, and from the coca-cola company, the beverage king. when these earnings came out, i saw the headlines and found
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myself thinking, ah-ha, this market needed reassurance and those two headlines which showed a better than expected number for coca-cola and in line number from johnson & johnson gave us that. at that very moment i felt this market wanted to latch on to something permanent, something good, something stalwart, something strong, especially in light of yesterday's horrific action and terrible news. into the breach step these two masterful american companies. i didn't even want to know more than the headlines. i didn't want those facts to get in the way of a comforting story. coke and j & j to the rescue. who needed more than that? too good to check out. fortunately, i didn't have to worry. coca-cola had better growth than people expected, even though the kind of growth that knockout, which is known as ko, the symbol, knockout has given you, is frankly on wall street far less than you can get from virtually any tech company and any bank that's reported. it doesn't matter. ceo is changing the business model to make the business more lucrative. and europe, which is supposed to be bad, was only bad, not worse.
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at this juncture, the buyer said we'll take it, and take it they did with coke rallying $2.28 to close for a gain of 5.7%. that's how the dow goes up so much. johnson & johnson, tougher call. here the facts almost did get in the way of a good story. my charitable trust owns this one. i was freaked out when i was reading this. freaked out to see that the medical device business totally laid an egg. but then i thought about it some more, and i thought about that egg lay, and i said to myself, wait a second! it's been ages since j & j actually made the number, let alone blow it away, and that would make for a story too great to check out. plus it really didn't matter, because j & j is still in the honeymoon phase with its ceo, alex gorske, and we all had visions of breakups dancing in our heads. put simply, coca-cola and johnson & johnson played their roles to a "t." if you listen closely you could almost hear a collective sigh of relief from coca-cola, almost like a wave at the ballpark,
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first washing over pepsico and then kellogg, colgate, kimberly-clark. and investors simultaneously took pfizer and merck and lilly, bristol-myers, celgene, gilead, regeneron, off that great inline earnings report from j & j. regeneron. oh, man, that can regenerate at the drop of a hat. soon enough, all of the noneconomic sensitive stocks started running. once they started stabilizing, you could tell buyers were eager to find another thesis to dip their toe in the water. how about those housing names? housing names have been hammered of late, right? we got a number this morning that shows housing starts up at a rate of one million, basically in line of what everyone is looking for. when you have a selloff based on economic weakness, any port in the storm, any inline number can ignite things. so what to take, let's see. you heard it, it's like -- it's like the terminator. yes, sherwin williams, two upgrades yesterday. ramped $5.92.
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another firm took owens corning from hold to buy. oh, man. and whirlpool boosted its dividend by 25%, even though that's precisely what i was looking for. saying that all was well with housing, a distinctly domestic industry, buy, buy, buy. and with that, the rattle in the bears was on. you could argue all this is just pure fancy. all day i heard about how the fed is stoking this rally with cheap money and it can't last. you know there's a problem with that thesis, though. the feds stoked the rally for the last 4,000 dow points, so that bearish attack simply doesn't hold water anymore. i'm bored by it. i heard there was nothing more than an anemic bounce back. that was the case at the opening bell when we rallied and started going down. but when the market didn't roll over, courtesy j & j and coca-cola, as much as i thought it might, i mean, it stopped going down, hung by a thread, buyers stepped in to take advantage of the decline. when gold didn't break down the appointed hour when margin clerks do the liquidating between 1:00 and 2:00, you got a second wave of buyers grabbing
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for anything still down. here's the bottom line. sometimes as stock sage marvin gaye told us in an adage that is as true now as when he sang it with kim westin back in 1965, it takes two, baby. it takes two. and those two were j & j and coca-cola. they were enough so that all went well today and investors lived happily ever after, at least until tomorrow's session. laurine in california. laurine. >> caller: boo-yah to ya, jim. >> sweet, what's up? >> caller: yesterday netflix got a buy and i'm wondering if you think this is going to continue. >> netflix is a very complicated story because a lot of people were short the stock. a lot of people feel here's the deal. netflix has moved up so much that it can't help itself. it has to come down. me, i think netflix is a household name and should be scooped up by microsoft or apple. probably won't happen. too aggressive. but in the interim, the stock is fine. jeff in california. jeff. >> caller: hi, cramer.
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how are you doing today? i was curious about the real estate market, why it's going up and down so much. if it would be a good time to buy home depot, and if i was to buy home depot, what price should i be looking at to purchase the stock? >> frank is a miracle man, the company doing great. but charitable trust scaled back home depot. told the people who described to we were booking a little profit here. can't tell you to take the stock we're selling. >> it takes two, baby. coca-cola and j & j were the dynamic duo that took this market up. "mad money" will be right back. coming up, blight or bright? gold hasn't been glittering lately, as a deep slide has brought about its worst drop since 1980. but has all the selling created an opportunity? cramer shines a light on the subject in tonight's edition of "off the charts."
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and later, i.p., oh my. there are some heavy-hitting newcomers making their wall street debut this week, from the grocery aisles to aquariums. cramer helps you find the stocks that can make a splash when you get to know these ipos. plus, promising asset. independent oil and gas producer, halcon resources, just revealed a new play in the oil-rich eagle ford shale. could this new field provide the fuel for a move higher? cramer's exclusive with the ceo is next. all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question, tweet cramer #madtweets. send jim an e-mail to, or give us a call at 1-800-743-cnbc. miss something?
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♪ everywhere i went, everyone asking the same exact question. what the heck is happening with gold? after a decade of roaring higher, year after year, outperforming pretty much every
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other asset class out there under the sun, precious metal seems to have really gone into major bear market mode, starting the past fall. declining for the most part slowly and steadily since october. then yesterday the price of gold just completely collapses, just swoons, down 9%, single session. finishing the day at $1,350 after dipping even lower. and today we get a 2% whiplash that was fast enough to give you whiplash. remember, as much as i don't like to see gold go lower, i think it should always be a part of a diversified portfolio, like i told you yesterday, as insurance against inflation and economic chaos, or as an alternative currency to the euro, the yen, the dollar at a time when central banks around the globe are printing money aggressively, obviously in a devaluation down method. now you know i think this monster decline in gold has been exacerbated by margin calls and that's when money managers buy gold with borrowed money and then when the value of their position, gold position goes
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down, the bankers ask the fund managers to put up more collateral. if they can't come up with the cash, then the margin clerks are allowed to just sell the gold these funds own without their permission, without regard to price, in order to repay the money that was borrowed in the first place. now gold is especially tough, because a substantial amount of gold is bought with borrowed money, as the margin rules are much less strict than the margin rules for when you buy stocks. the gold traders are also an incestuous bunch, people. i am sure they know that one of their number was in trouble yesterday, in trouble with margin, carrying an outside position they couldn't afford. you know what they decided to do? they decided to break him. i think they decided to break him with a bear rate. don't laugh. that's what happens. plus gold is very technically driven, and when the precious metal broke below $1500, it brought out a plethora of chart followers and i kept hearing sharks circling. if this technically bearish
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scenario is playing out and we have a hedge fund gone wild situation in gold where money managers who play with margin are now getting burned or being the target of a raid, oh, it can be very difficult to tell when and where the precious metal will bottom, because first of all, it doesn't have an interest rate connected to it, doesn't have a dividend, doesn't -- it's just out on its own. and that's why tonight when it's out on its own you know what we do? we go off the charts to try to answer that question. and we're doing it with someone real good, carly garner, terrific technician, co founder and author of "traders first book on commodities" and my colleague at and the person who said that interest rates were going to go down again not that long ago when everyone thought they were going to shoot up because the fed was going to stop qe3. no. before we get to the chart, i want to mention a tool that garner often uses to good effect. the commodity futures trading commissions commitment of traders report. it's a technical term. comes out every week. contains a lot of information about which groups of traders are playing various commodity
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markets in which direction. garner warns this report isn't as typically as useful with gold as it is with other commodity markets because large speculators, big money guys and small speculators are almost always net long gold. that said, she found something very interesting in the latest report. the large speculators and big boys are now holding the smallest net long position in gold since mid 2012. so what happened the last time the big boys trimmed their long positions this much? at the time, the price of gold was at $1530, and then it ran up quickly when it got to this level of $1790, 17% gain. so immediately garner is thinking, hmmm, if we follow that same pattern, there is plenty of room for the upside once selling is exhausted. that puts her in the buy camp. but when will the selling be exhausted? could be a tepid buy here. that's the big question. why don't we do this, look at the weekly chart of the price of gold. people when i tell you this chart is controlling, you must believe me. this is a technically driven instrument.
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couple things here. garner points out that gold was already trending down. but the huge breakdown came last week when goldman sachs issued a bearish recommendation on the precious metal, came out around 4:30 in the morning, i was shocked. it was already down a lot. as it turned out that level turned out to be the starting point for the accelerated selling. the starting point, not the end. and garner thinks $1450 could act as a ceiling of resistance on the way back up. in other words, a lid. think of it as a lid. take a gander at the relative strength index, the rsi that i often talk about, okay? this is an important momentum indicator that can help measure whether a stock or a commodity like gold has become overbought or oversold, and something incredible has happened here, people, to the rsi for gold. it has dipped below 30. i mean, that is just incredible. that is huge oversold territory. for the first time since, well, before the financial crisis. in fact, looking back over the last decade, garner couldn't find a single instance in which the gold market was more
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oversold than it is right now. so it's no wonder that gold bounced today, as anything that gets this oversold is a prime candidate to rebound. i love the rsi, because i like overbought/oversold oscillators. they give you a sense of coiled springs. what else? garner sees a strong floor of support for gold at $1320. now, that is a level, by the way, a level that held overnight, and she thinks there could be a psychological support at $1305. these are all crucial levels, people. garner believes these levels should hold for now, but buying gold here as a trade or an investment, rather than an insurance, is like, well -- here's my chart, okay? this is my chart. you ready? you know what that is? that's a falling knife. she can't rule out the possibility that if these levels don't hold, gold could go down to $1285. that is her complete downside target if it gets there. garner thinks, though, it's much more likely this floor of support from $1305 to $1320, $1,320, does hold. and in that case, we could see a routine bounceback, which could
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take gold to the $1450 level -- remember when goldman put the sell on it right there? that's where they said it was headed way down? that's nearly $60 above where gold is currently trading. the $1450 level also coincided with the sharp down trend resistance line, okay, and if it can break out, garner thinks this could turn into a genuine rally. was anyone else saying that today? if we get the breakout that garner could see gold running back to $1500, and if we can break through that level, she thinks we're off to the races. next resistance, $1620! and while she is not counting on it, that move could go to $1670 and wouldn't be totally out of the question. this woman is -- carley is bullish. if these potential targets sound too rosy to you, remember at the last time gold was this out of favor, middle of last year. do you know what it did when it was this out of favor, went on to rally 17%. if you look back a few short months ago, these are the levels gold was trading at. here's the bottom line. carley garner's chart work
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doesn't tell us that the pain in gold is over. but it does suggest it will end, possibly soon, as the weak-handed margin sellers may be wiped out, the bears circling, and wipe out the prey. and the precious metal, so oversold that it does, indeed look due for a bounce, like the one we started today. if you don't have any gold in your portfolio, you might want to take this opportunity to buy some. remember, i like the gold coins now. do it slowly before the rebound that garner predicts could happen. she was very contrary about bonds. got it right. i didn't know a soul today who said buy gold. after the break, i'll try to make you more money. coming up, i.p., oh my. there are some heavy hitting newcomers making their wall street debut this week. from the grocery aisles to aquariums, cramer helps you find the stocks that could make a splash when you get to know these ipos. and later, promising asset? independent oil and gas producer
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halcon resources just revealed the new play in the oil-rich eagle ford shale. could this new field provide the fuel for a move higher? cramer's exclusive with the ceo is next. all coming up on "mad money."
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in this increasingly volatile, increasingly contested and congested market, remember that there's been one thing that's consistently worked very well the whole year and that's ipos. the deals we have seen since the
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beginning of 2013 have given me some terrific returns which is why tonight i want to clue you in to some companies that have come public very quickly, deals where i think it would be worth your while to get into a piece of the action. first of all, sea world. that's a penguin. will trade under the symbol seas, s-e-a-s. i wanted to do this in a tuxedo. it's not just the home of shamu, like pfizer. the company has 11 locations, including three sea world's, two bush gardens, those are fantastic. three aquaticas, along with sesame place, i once danced there, and adventure island. i'm a big theme park aficionado. we like theme park plays here on "mad money," six flags and cedar fair and i think seaworld gives you a faster way to grow this business. this industry has been good to us in the past. cedar fair has given us a 165% return since i first recommended it in august of 2011.
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theme parks may not seem that sexy but these regional parks give you a chance to take a vacation that's not super expensive and if you're like me my kids love coasters. the barriers to entry are high. it's hard to get permission to build a new park which means less competition for the owners of existing ones. seaworld plans to sell 20 million shares at a price range of 24 to 27. the midpoint could be a $2.4 billion. at those levels seaworld trading in the same valuation of cedar fair and a 13% discount to six flags. i could endorse getting a piece of the seaworld deal as long as it doesn't go too far above 27 and here's the reason. there are some ways in which seaworld is actually better than the other theme park names. some of which it's a little bit worse. seaworld is the fastest revenue growth in the space and we love revenue growth on "mad money." a 7.2% increase last year and they have the highest per capita spending at the parks. that's fantastic. but on the other hand, seaworld has much more debt on its balance sheet than six flags.
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and then there is the dividend issue. six flags sports a terrific 5.1% yield. cedar fair, 6%. they are really fabulous. but at the midpoint of the range, seaworld would yield roughly 3%. still a good number, but not like the other guys. i think that dividend can ultimately go higher. and i can get behind seaworld if you're looking for more aggressive theme park play, one that can clean up its balance sheet without too much difficulty once it goes public. remember, you do not want to buy this one in the aftermarket if the stock pops right when it comes public and if seaworld doesn't strike your fancy, stick with the higher yielding cedar fair. i am partial to seaworld, though, because they let my kids pet penguins and sting rays and i have pictures to prove it. we have two supermarket deals. let's start with the latest and most relevant first. safeway is about to spin off black hawk, a huge prepaid gift card business, one of the
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largest third party distributors of gift cards on earth. don't misunderstand, black hawk doesn't just sell gift cards to safeway. that's what i first thought. no, safeway is a supermarket, they also do gift cards for retailers, amazons, lowe's, macy's, starbucks, among others, and they sell prepaid phone cards too. black hawk plans to come public at $1.1 billion. black hawk has the best growth metrics in the business, better than competitor green dot. i think the deal is participating in. my ultimate takeaway is the black hawk ipo will be good news for safeway if you can't get in. i'm willing to condone paying the range. right now safeway owns 96% of the company. after the ipo, they'll still own a significant majority of the company. safeway's traditional supermarket business is growing much more slowly than black hawk, which saw a 27% increase in earnings. at the moment, black hawk is buried within the safeway supermarket and not getting
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credit deserved for its growth. but it will start trading at a multiple that makes sense and safeway should go higher too, because people will put a number on what black hawk is worth to them, and safeway one of the best performers so far this year. then we've got a second supermarket related ipo, a little more complicated. could be pricing real soon, but i want you to be careful, even as i urge you to shop there like i do, and i'm talking about fairway, the tiny high-end supermarket chain based in the greater new york metro area with just 12 locations. fairway has some super aggressive growth goals as the company believes they can open many more locations across the country. i don't blame them, the stores are fabulous. but with the regional national plays you have to look at how the existing stores are doing and right now the answer to that is roughly in line with a lot of other supermarkets. can't go nuts. at the moment also, fairway is not profitable, got a lot of debt. and for the latest quarter, same store sales expected at 2.3% higher year over year. let's compare it to the other high end grocery space which is getting crowded with trader joe's, whole foods, especially in a city like new york.
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and if fairway wants to appeal to investors, it will have to post better numbers than whole foods, the gold standard, and the stock has been really hammered. tough getting out of its own way. if whole foods isn't working, it's hard for me to say that fairway should. now all that said, here's what's really important. fairway has a cult following. people have been known to get married there after meeting in the aisles. see you tonight near the tangerines. so i suspect a love affair will extend to the stock itself. not like green bay packers stock, but you get the picture. people like fairway. last but not least, want to draw your attention to a housing related deal. it's a bit further out than the others i just talked about. i'm referring to hd supply. not hdtv. it's home depot. this is a diversified industrial distribution company that home depot sold to a bunch of private equity players for $8.5 billion back in 2007. now these private equity guys think they can turn a nice profit. i think they can. so they recently filed an ipo. and i think they're right. since all things housing related are on fire, particularly today.
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you see whirlpool, sherwin williams and a million housing starts. that's the magic number for the home builders which this company helps to supply. here's the bottom line. ipos have been so strong this year, it's incredible. i suggest you try to get a piece of the seaworld deal. as well as the black hawk deal above the range. if you can't get in on the action, you can always buy slow and steady safeway which is going to benefit nicely from its spinoff and is an incredibly shareholder friendly company with one of the biggest buybacks on the big board. peter in new york. peter. >> caller: jim, how are you? >> real good. how about you, partner? >> caller: i'm doing very well. thanks for asking. i have a question about zoetis. i would like to know, i purchased it when it first came out at a reasonable price. did very well, but now it seems to be floundering. i would like to know what you think about it. >> it's tough to call it floundering. a lot of times you get these really big moves out of the ipo chute and people take profits, take profits, take profits. i love the animal health business. it's a fabulous growth business.
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i'm a buyer of zoetis. plain and simple. john in ohio. john. >> caller: hi, jim, boo-yah. i'm a first-time caller, jim, and i want to thank you for all your investment help. i was calling about the new ipo, pinnacle foods. it's off its highs, but was up today. what is your take on the stock and is it a buy? >> my charitable trust has been buying this stock as a replacement for some of the stocks it sold earlier, like general mills and kellogg. this is a high-yielding stock with terrific management. you will be hearing from them many times, i hope. i bet them on the day of the ipo and i thought management was very impressive. i think this company which is also duncan hines is a real good situation. especially in this environment. why don't we go to bruno in florida? bruno. >> caller: jimmy! big boo-yah to ya! >> hey, sunshine, what's shaking? >> caller: not much, man.
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my stock is arine technology. unfortunately, i got it when the company went public on the ipo day. what do you think about this? >> i was surprised the stock didn't act better, given how many ipo positive initiations there were today. i think the stock is a buy. i like that kind of programmatic advertising business for the web. i think you trade this thing up to 16, 17. i think you've got some room to run. all right. lots of ipos on the horizon. you know i'm liking this black hawk and seaworld. remember, not to chase in the after market, but slow and steady safeway is a good alternative if you can't get into black hawk. and you know what, fairway, real good produce. don't go anywhere. "lightning round" is coming up next.
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it is time! it is time for the "lightning round" on cramer's "mad money." my staff prepares the graphics. when you hear this sound, the lightning round is over. are you ready, skedaddy? i want to start with joey in wisconsin. >> caller: hey, jim, you do a great job on "squawk on the
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street." i'm calling about toll brothers. >> yeah, it's a buy, buy, buy. let's go to jim in new york. jim. >> caller: mr. cramer, jim, b-b-b- boo-yah to ya. >> i'm liking that. >> caller: thank you for your dedication, your help and your razor-sharp wit. i've been watching your biotechs for a good entry point. i notice immunogen dropped 16% and i'm scared. >> we were waiting, remember, they've got other drugs, initial drugs, they don't have the good royalty arrangement. and that's why i want you to pull the trigger and buy. let's go to jeff in florida. jeff. >> caller: hey, jim, how are you doing? >> how about you? >> caller: great job there. thank you. listen, i just want to know, what do you think about dollar tree? >> you know i like dollar tree
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and the candy aisle, the one in south philadelphia, one of the best, and neptune. let's go to irma in florida. >> caller: hi, irma blake here from sunny venice, florida. >> i'll be right near there this weekend. what's up? >> caller: i would like to know your opinion about mdu resources. >> you know, i like mdu resources. got a good yield, a steady business, and i recommend it. let's go to tony in connecticut. tony. >> caller: yes. mr. cramer. i bought some shares of krispy kreme doughnuts and i heard they're on a comeback. >> i think it's okay. i've got dunkin' donuts. down from 38, two from its high. yen in new york. >> caller: a huge chinese boo-yah from new york. how are you doing? >> the best kind of boo-yah. what's going on? >> caller: i'm good. thank you for choosing me. i have a question about genworth financial.
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the stock has been consolidating. >> i think the earnings are going to be good. they have a radian-like business, my favorite spec name right now, and i think genworth, which in full disclosure, is my insurer, can go higher. lilly in new york. >> caller: hi, jim. this is lilly from new york. i just wanted to tell you i enjoy your show very much. >> thank you. >> caller: and i'm learning a lot. my stock is e-x-e-l. >> very good speculative situation. remember, it's speculative, not really a drug company, it is a speculation. one more, scott in vienna. scott. >> caller: hey, jim, boo-yah. my 10-year-old girl wanted to tell you that you make money fun. i'm looking at gfa. >> that's too hard. that's a brazilian company and i've been struggling with brazil lately.
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if you want to go into an emerging market that's good, go buy the ishares mexico, eww, my charitable trust owns them. and that's the best situation. boy, interest rates are coming down, the peso is going to 10-1. mark my words. and that, ladies and gentlemen, is the conclusion of the "lightning round"! >> the "lightning round" is sponsored by td ameritrade. coming up, promising asset? independent oil and gas producer, halcon resources, just revealed a new play in the oil-rich eagle ford shale. could this new field provide the fuel for a move higher? cramer's exclusive with the ceo is next. [ indistinct shouting ]
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at a moment where oil feels like it can't catch a break, even on days like today, let me remind you we are smack in the middle of a north american energy revolution, a whole host of companies that discovered huge new deposits of oil, very positive, here in america. and if the stock market won't give the valuation they deserve, i think other companies will swoop in from other countries, acquire them, get their hands around these new-found resources. we know this because it's happened time and again. remember petrohawk, the unconventional oil play that got taken over by bhp in 2011 for a massive 69% premium? that as a terrific deal for anyone who owned a piece of that company like we represented, and floyd wilson has a new vehicle, halcon resources, same ticker as petro, hk. halcon was formed back in february of 2012, a
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recapitalization of r-a-m, ram energy and since then building a base of unconventional, high-growth assets, lots of oil. good. wilson made no secret his ultimate goal is to bring up the company and take a profit like petro. the fact is, wilson is a serial seller of companies. for petro sold energy to exploration and now doing the same thing with halcon. the company has major positions in bakken. we've been there. utica, we've been there. woodbine in east texas. eagle ford. just yesterday announced they have this giant i think terrific -- we'll find out more about it, eagle ford play. these are areas wilson knows very well. let's check in with industry legend floyd wilson, chairman and ceo of halcon resources, find out more about where his new company is headed. mr. wilson, welcome back to "mad money." good to see you. >> thank you. >> first of all, congratulations on what you did with petro. a lot of people who own, watch you, talk about it, bought the stock, put it away, it was remarkable. where are we in terms of other countries, companies still
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coming into the united states? seems to have cooled as of late. >> there is a lot of interest, of course. and you read about it every day. strangely enough, politically it's more friendly for them here than in their own countries. >> pretty amazing when you think about it, because a lot of people feel washington is very anti business. >> i don't know about that, but it is pretty amazing when you think of it. >> okay. we have -- you just did a very big acquisition in a place we think is amazing, the bakken where it's already -- the production per day is up 40% from when we were there, and we were only there a year-and-a-half ago. >> yes. >> how is it possible that so much oil is there, and why would anyone want to sell you a position in bakken, given how you have done over many years? >> well, the oil is being produced through technology in advances in technology, and the companies that have that technology on board, those skills, they're going to get more out than the last guy. the people that we brought in are very smart oil and gas people, a family that's been in
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the business for years. they didn't have to deal in stock so they're making a bet on their own. >> how about utica? you've been able to amass a pretty good position. when we were in utica, we were with aubrey mcclendon, previous ceo of chesapeake, and he stumbled on what he thought would be an oily area and turned out to be natural gas. i know you've got some wells coming due right now. how does it look, more oil and gas? >> it looks great. >> it does. >> it looks more oil than gas but there is some gas there. so we'll have to build the infrastructure to get all of the product offsite. >> when i read through the financials and conference calls, you want to do it your way, which i know builds up great value. but you'll also be outspending your current cash flow, so you'll have to make a series of disposals in order to make that happen? >> we have planned divestitures of quite a bit of money involved. maybe $400 million or more. we also have been raising money in preparation for this drilling buildup that we're engaged in right now. >> now, you've got 130,000 net acres in utica, some in pennsylvania, some in ohio. you said the first two wells
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will begin flow back in april. so what does that oil do if you don't really have the infrastructure? you put it in tanks? you take it by truck? >> well, as you said, we do it our way. so we lay pipe before we start flowing the wells back. we make that additional bet. >> okay, now, eagle ford, when we had mark papa on, says eagle ford is the equivalent of saudi arabia, very inexpensive, the oil is real good, and there is a way to take it to market. is eagle ford going to be the biggest of the ones that are important that we talk about? >> you know, it's hard to say. you might remember we had some background in eagle ford at petrohawk, having discovered the entire play. it's going to be a big play for us. we have just gotten into it. we just reported it publicly. it's -- we're very excited about it. >> now, when we looked at eagle ford and we looked at the bakken, we were laughed at initially, because we felt that these could make us -- these two could be -- make us go far
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toward continental independence. when we had david demers on from core labs recently, he said there may be two fields that are even bigger than eagle ford and bakken in this country. i know you have some undisclosed locations, but are you hearing that there could be two shale fields that are even bigger or as big as those in this country? >> yes, we've heard that. >> you have. >> yeah. >> and presumably you're doing your best to be a part of it. >> can't say. >> well, it's better than saying i've never heard of them. how about the price oil? what do you think? down to 80, under 100? >> you know, it's really volatile. and a lot of it is driven by these new oil supplies. and the opportunity for our country is that we're going to -- this will moderate the oil price for a long time. we need it high enough to make money in the business, but i don't think the prospect of $200 per barrel oil is out there anymore. >> but that doesn't mean that your company with the proper hedges and with lower cost of
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some of these fields can't make a lot of money in what you pick. >> very comfortable at current levels. >> excellent. okay. you've just heard from floyd wilson, halcon resources. i urge you to read about his previous record, because it's what makes hk so exciting to me. stay with cramer.
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what do people expect from financial companies reporting? do they expect in this crazy, ridiculous, and unsure world
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that some banking ceo of a company with economic sensitivity will come out and say, you know what, we see excellent earnings in the future? does anyone think that a bank ceo will say this is just the beginning of what i think will be a sustained period of stronger earnings, even if he or she thinks that's the case? do you think bankers after being hit over the head by repeated scandals should come out and say this is a terrific time and it will only get better, buy, buy, buy? someone obviously does and is feeling very let down, because the reaction to these extraordinary good bank earnings is about as ho-hum to negative as i've ever seen. come on, jpmorgan blew away the number with wealth management business just generating amazing returns. they obviously are in terrific shape when it comes to the reserves. the international business is very strong. but they didn't lend enough to home buyers, so it's no good. stock went -- got hit. wells fargo is the kind of growth from its stores, its branches, that most retailers would kill for. you come into a wells fargo, you're likely to leave with far more product than you might expect, it's called cross selling and the product as
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analyzed over a lifetime once it's taken home. i love that model so much. but the 13% of its business that is home mortgages didn't deliver what we expected. next thing you know, it's disappointed. wells delivered a killer number with great growth. disappointing. u.s. bank, also a good quarter, solid, in line, but not good enough. and didn't reassure investors, instead highlighted uncertain times. it didn't keep them from delivering a good report. no matter, usb's negativity caused the stock to get hammered on one of the best days in ages, that's why it's down 58 cents. goldman sachs, beautiful, but nutty macro situation so the stock is hit bad. why not? the release contained nothing reassuring. do you know what all these conference calls lacked? how about a statement that said we see loan demand and overall business activity improving over time. maybe we even expect a strong second half from a variety of income lines. of course, if you're coca-cola,
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you don't need to say anything about the future. beat the expectations. same with j & j. both have tremendous visibility. but the bank can't claim that and we wouldn't believe them if they did. plus they would be taking on the authorities if they spoke that positively. particularly the federal reserve. they would be jeopardizing the position with senator elizabeth warren. even president might want to attack them. why bother? but without that reassurance, nobody wants these stocks. think about it. u.s. bank corps, jpmorgan, goldman sachs and wells fargo reported better than we believed given how lousy the economy is. if we get a better economy, you will want to own these stocks. but the companies can't say that. it's the new horrid normal. where only the most consistent companies can say anything good. if you want to outperform the average, as the recession resistant names. they have conviction because the ceos have conviction, and they can give you visibility for multiple years. but bank ceos, being optimistic
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and not cautious, after what they have been through, don't be ridiculous. they can't reassure you and they know better than to be bullish. and that's why they are so darn tough to own. stick with cramer. uh, i'm in a timeout because apparently
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